The Deal Busters

GOP chair's super slush fund helps sink arena deal

In the strip-center wilds of Westheimer beyond the Beltway, the election-night crowd munched on Pappa La Rosa's cheese sticks and spicy ravioli, savoring early reports of success in their insurgent effort to detonate the downtown arena deal.

The heroes of the moment, wizened Harris County GOP Chair Gary Polland and moon-faced Tax Assessor-Collector Paul Bettencourt, flitted from table to table accepting early congratulations from the mostly Republican celebrants. Everyone liked the results, but no one knew to compliment the local GOP's version of Batman and Robin for a truly inspired bit of campaign improvisation that helped boost the opposition down the home stretch to victory.

It isn't often that politicos find new ways to get around state laws requiring disclosure of political contributors, but the Republican brain trust fighting the arena pact hammered out by Rockets owner Les Alexander and Mayor Lee Brown did just that. The maneuver Polland came up with was so original it left experts at the Texas Ethics Commission and veteran state legislators at a loss to cite any comparable examples from Texas's hoary political past. One state official contends it was not only original -- it was illegal.

Steve Lowry

Brown's re-election was marred by a GOP cash infusion against his arena plan.

Polland insists his scheme to mask contributors is legit.

Chairman Polland readily admits he collected nearly a quarter-million dollars from contributors around the state who were opposed to the arena. He deposited the checks into his chairman account, which is shielded from public scrutiny because he is a political party leader, not a government official.

Usually the county chair's account is used for nothing more than to campaign for the party post and cover mundane office expenses such as postage and entertainment. Polland hit on the notion of using it as a campaign slush fund that veils the identities of contributors.

Polland collected $223,000, which he passed on to Citizens for Accountability, the anti-arena political action committee, without disclosing who gave him the money. In the final pre-election PAC report, Polland's cash infusion dwarfed all other contributions, except for the $100,000 from Chuck Watson, the owner of the Aeros hockey team and the Compaq Center operator who is Alexander's archrival. According to Polland and Bettencourt, that political money laundering is legal.

"What happened was that, prior to the PAC being formed, when people started sending money to fight the arena they sent it to me," says Polland. He says he told the contributors, "you can write a check to the Republican Party, you can wait till the PAC forms, or you can write a check to my campaign account." Polland says most of them took the last option, writing a check to his chairman account. Had any of the donors contributed directly to the anti-arena effort, they would have been required under law to reveal their identities.

Asked for the names of those faceless folk who forked over the money to him, Polland replies, "I'm not obligated to disclose that." Then he grins.

"What I will do is when this is all over, I'll send a letter to everybody who gave me money asking for permission to release," vows the chairman. "If they give me permission, I'll give it to you first!"

Bettencourt, the former county GOP treasurer who had the reputation as the financial brains behind Polland, explains that "the funds the chairman raises all across the state of Texas by statute is his money and not party money." "In fact," he adds, "the chairmen of political parties do not have to report their campaign money under election law.Any political party chairperson from the county level anywhere in the state can raise those monies, and they are effectively unrestricted."

While Bettencourt defends the anti-arena campaign as nonpartisan and grassroots, he agrees that "the monetary sources on this one are probably not as diverse as the grassroots team. That much I'll give to you."

State Representative Steve Wollens of Dallas, chair of the state affairs committee and an election legislation expert, was stumped by Bettencourt's explanation. "I didn't know that," says Wollens, of the private nature of a county party chair's account. "I had no idea." Wollens wonders how Polland could collect money for a specific issue such as the arena without becoming a political action committee himself.

In justifying Polland's cash maneuver, Bettencourt speculates that Democratic County Chairwoman Sue Schechter is also collecting big bucks through her private account.

"I tell you what. I wouldn't put it past her to get some money from [lawyer John] O'Quinn and some of the others that are doing extremely well from the tobacco settlement," says the county tax assessor-collector. "It's strictly up to them, because that's the way, at this time, the system exists."

Schechter is nonplussed by the accusation. "Get outta here," she exclaims. "You're talking to someone whose account has sat on $900 for the last year and a half. It was such a pain in the ass I was thinking about closing it."

Schechter says the intent of the state law is to exempt internal party activities from reporting requirements, not to create an unreported political slush fund.

"I think it's dishonest," the Democratic leader says of Polland's maneuver. "I think it shows a lack of integrity, using the system in a way it was never meant to be. It shows another reason why people are so turned off to politics."